CARY, N.C. -

Recent data from Equifax, summing up 2013 trends, shows that the number of subprime auto financing originations climbed for the fifth year in a row, surpassing 7 million contracts for the first time since 2007.

Analysts indicated the number of subprime contracts for 2013 came in at 7.3 million, up from 6.6 million a year earlier. Back in 2007, the subprime origination amount was 7.8 million, off slightly from the recent high of 8.1 million set in 2006.

“In 2013, the independent auto finance companies, the non-bank, non-captive, non-credit union companies, really led the way,” said Lou Loquasto, Equifax’s auto finance vertical leader.

Loquasto explained to SubPrime Auto Finance News — one of the sister publications to Auto Remarketing — what is providing the fuel for this continued subprime resurgence.

“We’ve seen new companies come into the market and private equity investing a lot into the market. That’s reflecting in the data,” he said.

“It’s because that’s where the highest yields are. These private equity companies can invest in anything they want. When they decide to invest in auto, it’s always in subprime auto because they’re chasing the highest yields,” Loquasto went on to say.

These stronger subprime numbers — along with topics ranging from the continue developments in federal dealer finance regulations to calls for greater transparency — are just some of the many movements impacting the auto finance market and directly affecting the way dealers do business.

In light of these developments, we have put together a special F&I Report to give you a clear picture of the market and its most pressing topics. This special section appears in our May 1 print edition of Auto Remarketing as well as the forthcoming digital version of that magazine.

Another topic we discuss in the F&I Report is a new approach to auto financing.

According to Pete MacInnis, the way vehicles have typically been financed at dealerships for generations isn’t necessarily the most efficient process.

MacInnis is the chief executive officer of E-LEND Solutions, a financing platform that aims to generate more transparency in the auto loan process by disclosing financed terms to the customer at the beginning of vehicle buying, regardless of whether the shopper is buying online or at the dealership.

The company contends this can also lead to a more streamlined and quicker sales process, while also meeting the additional transparency requirements pushed by government agencies as of late.

“Our mission is to take the time it takes to buy a vehicle from hours down to minutes. And most of that process that is so lengthy is all around the finance side. So for us, what we’re trying to do is create better consumer experiences and more efficient processes for both dealers and lenders,” MacInnis told Auto Remarketing during an interview at this year’s NADA Convention & Expo in New Orleans.

“And the way we do that is by taking consumer shopping online and giving them that information-rich experience that they’re looking for,” he continued.

MacInnis went on to note:  “Now, it’s gotten to the point where consumers say, ‘I don’t just want to know price; I want to know what my payments are. I want to know what my terms are. I want to know what I can afford to make on a monthly payment.’ And so from that standpoint, consumers are driving demand.”

In its press release this winter announcing the platform — which is multi-faceted and launching in phases, with the first part being piloted by dealerships in May — E-LEND outlined the offerings of the platform, saying it can:

  • Display real, approved financing terms from dealership lenders at the very front of the shopping process to consumers — whether they’re researching at a dealership, OEM or auto portal website.
     
  • Enable dealerships to cut the inefficient three- to four-hour sales and financing process to minutes, resulting in huge time and cost savings — and much improved customer satisfaction.
     
  • Eliminate the guesswork and human error in determining loan terms (which often leads to costly loan rewrites and deal unwinds) — by aggregating lenders’ complex pricing and loan rules data inside the decision engine.
     
  • Ensure ironclad dealer compliance if proposed CFPB regulations come to pass, by providing transparency, consistently applied underwriting criteria and detailed reporting on every step of the finance decision.

More details on E-LEND Solutions, CFPB advice from industry counsel, CarMax's subprime auto finance strategy, and the ties between subprime and used-car sales are available in the aforementioned May 1 issues.